Cairn Energy confident over India tax dispute, to focus on Senegal

Cairn Energy said it remains fully funded from existing financial resources to deliver its exploration and appraisal programme, and the group is confident that its tax dispute with India will be resolved.

The oil and gas exploration company said group net cash at the end of December was $603m (£422m), while forecast development expenditure for 2016 and 2017, taking the UK development projects through to cash flow generation, is $492m.

Cairn said much of its spending would be focused on Senegal projects. The company said it was working closely with the government there and joint venture partners, operating a multi-well evaluation programme consisting of appraisal and exploration drilling in 2016.

In addition, Cairn said it was pleased with the positive flow tests on the SNE-2 appraisal well confirming the commercial deliverability of the discovery.

Chief executive Simon Thomson said further appraisal activity this year will test the overall scale and extent of the resource base in Senegal, which should lead to a revision of the resource estimates.

He added that drilling operations on the next appraisal well, SNE-3, are now underway.

As regards the tax dispute, it said proceedings against the government of India under the UK-India Investment Treaty seeking resolution have now formally begun following the agreement between the two parties on the appointment of a panel of three international arbitrators.